Dissident Voice

April
16, 2003

The
preparation for the United States' attack on Iraq must have been the most
public in history. In contrast, the Bush Administration's stealth attack on the
poor has gone almost unnoticed. There has been no "shock and awe," no
massing of the troops, no nightly commentaries. Indeed, the attack on the poor
is camouflaged in "minor" regulatory changes, routine
reauthorizations, "voluntary" block grants, budgetary complexities
and other arcana, almost as if our eyes were supposed to glaze over before we
really understood. Place the many pieces on the table together, however, and
the breadth and the depth of the attack become startling.

The
number of well-functioning programs with bipartisan support that the
Administration proposes tinkering with is breathtaking ... a little sand in the
gears here, some water in the gas tank there. Head Start, the Earned Income Tax
Credit (EITC), the school lunch and school breakfast programs, Medicaid,
Temporary Assistance to Needy Families (TANF), successful housing programs,
child care, and other programs are all lined up for changes. In most cases,
however, understanding how the proposed changes will actually affect the poor
requires more than a cursory look at each program and each proposed change.

Bear
with me. The devil is in the details.

The
school lunch and school breakfast programs, for instance, have broad public
support. Providing free or low-cost meals for school children from poor and
near-poor families, these programs are widely credited with reducing hunger and
malnutrition among the nation's children. Aside from the Reagan
Administration's notorious attempt to reclassify ketchup as a vegetable, has
anyone objected to this program? Apparently so. Responding to one study
reported in the media to show that 27 percent of children enrolled in the
program were actually ineligible, the Bush Administration proposes to require
documentation of income levels from all applicant families to "reduce
fraud and error."

On
the surface, it's a reasonable goal. The nonpartisan Center on Budget and
Policy Priorities (CBPP), however, has taken a closer look at the cited study,
revealing numerous problems that make the estimates suspect. For starters,
almost 75 percent of families declared "ineligible" were actually
families that simply didn't respond to requests for documentation. Other
studies demonstrate that in similar situations over 80 percent of
non-responders are, in fact, eligible; they just don't respond. Well, what's
wrong with requiring more documentation? Studies have clearly shown that in
populations with erratic work histories and complicated family lives,
especially immigrants who don't speak English well, requiring documentation
drives away more eligible than ineligible people. Based on these and other
studies, and using conservative assumptions, the CBPP estimates that requiring
documentation of income level would keep over two million eligible children
from receiving free or reduced-cost meals.

The
Bush Administration apparently also hopes to drive people out of the Earned
Income Tax Credit program (EITC) by the same gambit -- requiring more
documentation. The EITC is a provision of the tax code that provides a
refundable tax credit to working families. It is the most successful
anti-poverty program the federal government administers, bringing more children
out of poverty than any other program. Instituted by Richard Nixon in the early
1970s, EITC has a long history of bipartisan support. Studies show that it
encourages work. What could be wrong with it?

The
problem is that a 1999 Internal Revenue Service (IRS) study showed an error
rate of 20 to 25 percent, so the Administration proposes requiring income
stubs, child care receipts and other documentation for eligibility
determination. Never mind that most errors are honest mistakes stemming from a
notoriously complicated form for claiming the EITC; never mind that since the
1999 study the IRS has instituted changes in the program (such as
simplification of the forms and cross-checking welfare and Social Security
databases) that it believes will reduce the error rate by more than half; never
mind that a Government Accounting Office study finds that the President's
proposal to require further documentation will drive away the eligible; never
mind that further simplification and cross-checking could reduce the error rate
even more; and never mind that the most common tax-fudgers are small businesses
or that the fudging that costs the government the most revenue comes from
corporate tax shelters, President Bush chooses to go after the working
poor--those with the least political power and the most to lose. But one would
hardly notice the assault without paying close attention.

In
dollar amounts, the most significant threat to the poor is the current
Administration plan to change Medicaid and the Children's Health Insurance
Program (CHIP) from entitlement programs into what are essentially block
grants. The Administration proposes increased funding over the next seven years
and increased state flexibility in running the program in return for a cap on
federal expenditures. Since the proposal would reduce the block grants in years
seven to ten in order to recoup the front-loaded increases, the "increased
funding" is in fact a loan that will come due when neither current state
officials nor the Bush Administration are any longer in office.

While
acceptance of this change would be voluntary for states, the federal government
is dangling a short-term increase in funding at the very moment when the financial
health of state governments is devastated and projected deficits may reach a
combined total $70 billion. Because most states are constitutionally forbidden
to engage in deficit spending, any financial shortfall means drastically
reduced programs. Medicaid is often the single highest cost in a state budget,
so state officials can easily be tempted to accept the federal "loan"
now and let someone else worry about the consequences later.

Once
the states have agreed to accept the block grants, however, they have tied
themselves to a non-negotiable federal cap on expenditures. Although the block
grants would rise with inflation, states would not receive additional funds if
the number of people requiring care rose--as is to be expected as the baby boomers
age, or during a recession, or if the trend of ever fewer employers covering
the health insurance costs of their employees does not abate, or if the costs
of health care continue their steady rise above the levels of inflation (due,
for instance, to technological advances in care). Then, the states are very
likely to find their Medicaid programs costing considerably more with no
additional federal funding available.

It
is the "added flexibility" which would make block grants especially
dangerous to the poor during times of financial distress when states have to
find some, way of reducing expenditures. States would be allowed to scale back
coverage of necessary health care, impose unaffordable premiums and
co-payments, mandate managed care, or provide differing levels of care for
different populations.

Included
in the Administration's Medicaid proposal are other changes that would also
hurt the poor. The Children's Health Insurance Program, for instance, would be
merged into the general Medicaid fund, meaning that children would have to
compete with the elderly and disabled for limited funds. Most people think of
Medicaid as covering the poor, especially young families, and, in fact,
two-thirds of Medicaid recipients are young families. But two-thirds of
Medicaid expenses are for the elderly, primarily to cover nursing home costs.
While this coverage is only available for the elderly poor, staying in a
nursing home for very long makes almost everyone poor, so much of the nursing
home benefit goes to elderly who were for most of their lives working class,
middle-class, or even upper-class. Nursing home costs have been rising even
faster than other health care costs.

In
another sure-to-be-unnoticed "administrative" change, the
Disproportionate Share Hospital (DSH) program would also be folded into
Medicaid. Currently hospitals that serve a disproportionate share of Medicaid
and uninsured patients are eligible to receive supplemental Medicaid payments
through DSH. These hospitals would now have to compete with all other providers
to obtain compensation from the state's (now limited) Medicaid block grant.

In
states that accept the bait of increased short-term funding, officials will
discover that Medicaid is no longer an entitlement program (meaning that all
who meet the qualifications must receive benefits) but one more underfunded
mandate that the federal government has passed on to it. Since Medicaid is
probably the most important (and certainly the most expensive) program for the
poor, the future suffering being slotted in today is likely to be enormous.

On
the Medicaid regulatory front, the Bush Administration tried issuing new rules
limiting emergency medical services for the poor by allowing states to set a
maximum number of visits to the emergency room. These rules also suspended the
current standard by which a "prudent layman" would find it necessary
to go to the emergency room, requiring instead that the visit be medically
necessary in the judgment of a medical professional. Fortunately, due to widespread
opposition, the rules were rescinded five days after the press reported their
appearance. Nevertheless, they are one more marker of either the
Administration's callousness to or outright hostility to the poor.

The
President is also proposing to transform the widely praised Head Start program
into a block grant and giving control over it to the states. Instead of federal
grants going directly to community organizations, individual states would be
allowed to use Head Start dollars to fill in gaps in their own programs and
spread dollars more evenly across other programs. National performance
standards and any assurance of comprehensive services for enrolled children
would be eliminated. It is possible, of course, that states would use their
increased flexibility to improve the programs, but it is hard to understand why
the President wants to tinker with a highly successful program that no one is
complaining about.

While
the President has named himself the "Education President," his budget
priorities belie the title. The centerpiece of the President's education reform
plan was an $18.5 billion program included in the No Child Left Behind Act
serving disadvantaged children. When it came to actual budgetary amounts
proposed for this year, however, the program came up $6.15 billion short. At a
time when seven million children are left home alone and unsupervised on a
regular basis--often after school hours when youths are at greatest risk of
substance abuse and juvenile crime--the President proposes cutting after-school
services for children and youth by $400 million, pushing more than a half
million children and teenagers out of programs that law enforcement groups
praise for steering participants away from crime and drugs.

In
his State of the Union speech this past February, the President proudly
announced a $450 million program for mentoring the children of prisoners. His
budget, however, provides only $150 million. What he didn't say was that he
also proposes eliminating a number of programs now reaching those very same
children--for example, the Elementary and Secondary Counseling Program, the
Dropout Prevention Program, and the Juvenile Accountability Incentive Block
Grant--and cutting other programs, so overall his proposal actually cuts $39
million from current expenditures for such programs.

The
1996 Welfare Reform law is also currently up for re-authorization. Most
observers predicted that the political battle would be over whether funds for
the program would be continued at the present level or cut. Instead, in early
2002 the Bush Administration surprised nearly everyone by proposing changes
that would increase participant work requirements and reduce state flexibility
in administering the program.

This
Clinton-era law may not have been generous to the poor, but it contained one
very positive innovation. It gave the states great flexibility in designing
work support programs--like childcare, transportation assistance, substance
abuse treatment, continuation of some welfare benefits while at work, and
on-going Medicaid coverage while working--and in providing for the education
and training single mothers might need. By far the most successful programs
have been in states like California and Minnesota that have taken advantage of
this flexibility to tailor programs to the needs of the recipients.

One
would think, then, that reauthorization would, at least, offer an opportunity
to tweak Temporary Assistance to Needy Families (TANF) by strengthening work
supports and encouraging the remaining states to develop their own flexibly
designed programs. Given that the President espouses states rights and the
principle of devolving power to the states, one might reasonably expect him to
use reauthorization as an opportunity to strengthen the states' abilities to
design their own programs in response to local needs. Instead, the White House
has proposed defining "work-related activities" very narrowly,
functionally curtailing the majority of the most successful current state
programs. A parent's participation in educational or vocational training,
substance abuse treatment, or other programs designed to address individual
barriers to employment would be limited to three months in any two-year period.
After the three months, mothers would have to go to work, ready or not.
Furthermore, if they couldn't find jobs after that three-month period, states
would essentially be forced to develop unpaid "workfare" programs to
employ them, an approach shown to be ineffective in promoting actual
employment. Finally, all welfare recipients would have to work a full 40 hours
a week. The common practice of allowing mothers with children under six months
to work part-time would not be allowed.

Over
the past six years, the most successful states have tailored their programs to
the individual needs of the recipients, providing GED education, specific job
training, or even counseling for domestic abuse. The earnings of California
TANF recipients who attended community college programs, for instance,
increased markedly thereafter, but the largest gains were for those who
completed vocational certificates or received associates degrees, which take
much longer than twelve months to complete. The President's proposals will not
give credit for such programs. Of the twenty-six presently acceptable
work-related activities in Minnesota's successful Family Investment Program,
for instance, the President's proposal would disqualify twenty-one.

Most
observers are hard pressed even to understand the rationale behind the President's
approach. It does fit, however, into the broad assault on the poor that seems
to shape his social policies. In that, at least, he and his administration seem
consistent.

Almost
every amendment to a social program the President has proposed contains similar
problems. Childcare support, for instance, has been demonstrated to be crucial
in helping low-income families stay off welfare. Mothers transitioning from
welfare to work have done far better if childcare has been provided. Already,
under the original Welfare Reform and other childcare bills, only one out of
seven eligible and needy families receive such help, and it is widely agreed
that more support is needed. The Administration's recommended changes to
Welfare Reform, however, will create still more families requiring childcare
assistance but provide no additional funds to support them. The President's new
budget acknowledges that over 200,000 children will be dropped from childcare
over the next five years.

The
administration's housing budget proposes to turn the Section 8 housing program
into a block grant administered by the states without even adding in any
additional money for administrative costs. The White House proposal also
requires states to charge a minimum of $50 a month for rent, no matter how low
a family's income. Again, in contrast to the Administration's announced desire
for state flexibility, states could not even exempt individual families from
the new minimum charge without approval from Washington. And the budget simply
eliminates another program that has demolished 115,000 dilapidated public
housing units over the past ten years and built 60,000 new ones. The official
rationale is that there is no longer any need for this program, which surely
comes as a surprise to the nation's mayors who are struggling with record
levels of homelessness.

The
No Child Left Behind Act, which the "Education President" showcased,
imposed sweeping testing requirements on school children. The consequences will
be traumatic for many schools that such children attend. While few object to
measuring a school's academic performance and holding it accountable, the
standardized, multiple-choice tests used threaten to seriously distort
education, especially in schools that are of borderline quality. (In school
districts with significant numbers of private, parochial, and charter schools,
which have siphoned off many of the best students, the regular public schools
are at a marked disadvantage on tests of this sort.) Worried teachers focus
their students on cramming specifically for such standardized tests,
emphasizing test-taking skills and the limited kinds of information
multiple-choice tests can best assess. Broader educational goals--appreciation
of literature, encouragement of critical thinking, support of creative
expression or writing skills, and so on--can too easily be bypassed, leading to
even further gaps between good schools (that don't need to worry so much about
the tests) and marginal ones. But the real problem for public schools is that
once a school fails in such testing it is subject to "sanctions" that
divert funding and control from the public to the private sector. Such
sanctions include school-choice programs, subcontracting for services,
replacing staff and administrators, mandating new curricula, state takeover,
private management, and conversion to a charter school.

The
No Child Left Behind Act was passed with bipartisan support and cannot,
therefore, be blamed entirely on this administration. The President's 2003 and
2004 budgets, however, failed to include the increased spending promised to
school districts to help them meet the new requirements, and the responsibility
for that failure does lie with the President alone. The actual spending in his
2003 budget and the amount proposed for 2004 are, respectively, $5 billion and
$6 billion short of the amounts promised in the original act. In this way, the
centerpiece of the President's education proposal has become just another
underfunded mandate to the states.

What
will ultimately prove the most devastating for the poor, however, are not the
specifics of any policy or group of policies, but the Bush Administration's
direct assault on the federal budget and the very concept of progressive
taxation. The multi-trillion dollar tax cuts passed and proposed, which go
primarily to the wealthy, and the vast increases in the military budget and
defense spending, combined with an economic recession that shows no sign of
going away soon, have devastated the federal budget. A healthy surplus has been
converted to deficits as far as the eye can see. While the words "trickle
down economics" are assiduously avoided (when asked by Senate Democrats,
Treasury Secretary John Snow said he preferred the term "circular
economics"), we are, in fact, seeing an extreme version of the Reaganomics
that bankrupted the United States in the 1980s.

What
the Urban Institute's Leonard Burman calls the "killer toxin" are the
tax-free "savings accounts" that will poison what remains of the
progressive tax system. The 2004 budget features new "lifetime savings
accounts," which will allow anyone to save up to $7,500 per year for any
purpose and all interest, dividend or capital gains income from these accounts
would be forever tax free. It will also more than double the contribution limit
for "retirement savings accounts" (from $3,000 to $7,500) and remove
the income limits that had previously confined these accounts to middle-income
families. Altogether, a couple could set aside up to $30,000 a year in these
tax-free accounts--$3 million to $4 million including interest over a working
life. To these two blockbuster proposals must be added the proposed or already
enacted $5,000 medical savings accounts, $2,000 education savings accounts,
college savings plans (which allow hundreds of thousands of dollars of tax-free
savings for education), and traditional pensions and 401(k) retirement accounts
(which were vastly expanded in 2001). Why would anyone pay tax on any savings?

But,
you may well ask, how could this be an attack on the tax system itself, much
less the poor? As it happens, people with incomes over $1 million a year get
more than 40 percent of that income from savings accounts. Many earn all of
their income from savings. Further exempting these high-income people from
income tax makes the entire tax system far less progressive. Tax revenue has to
come from someplace, however, so either social programs are cut or
middle-class, working-class, and poor people are forced to pay more taxes.

In
a clever twist that keeps such proposals flying under the usual media radar
screens, these savings accounts will be "revenue neutral" in the
short term ... at least until this President is no longer in office. For the
next several years, under the President's proposal, the losses in tax revenue
on money socked away in these saving accounts would be "balanced" by
an expensive budget gimmick that would work like this: People who now have
traditional Individual Retirement Accounts (IRAs) -- in which amounts invested
in any year are tax deductible but interest earned over the succeeding years is
not -- will be allowed to roll their IRAs over into these new savings accounts.
They would pay increased income taxes now (because the rolled-over funds would
be taxed), thus "balancing" the revenue lost from the savings plans,
but at the cost of a much greater tax revenue loss in the future because all
interest will not be taxed. In other words, the true cost of these proposals
would be pushed onto our children and grandchildren.

Of
course, the deleterious effects of these proposals trickle down to the many
states that base their income taxes on federal income tax laws. Since more and
more responsibility for social programs is devolving onto the states and these
states are moving further and further into the forbidden territory of
deficit-spending, the poor are guaranteed to suffer enormously--as poverty
stricken school systems around the country are already finding out. But since
state-run programs will be the main financial losers, the federal government
will have managed to absolve itself of all responsibility for the catastrophe
to come. Furthermore, states rely to a great extent on highly regressive sales
taxes for their revenue, meaning that ever more of the tax burden is likely to
be foisted off onto the poor as these are, of necessity, raised.

The
magnitude of this aspect of the assault on the poor cannot be overestimated.
With both federal and state governments in perpetual deficit, conservatives
will finally have defeated "big government" - their goal since they
first took power in the Reagan era. While the President will continue to
emphasize the importance of state control, few will point out that there will
be no money for state programs either.

The
President's stealth attack on the poor is only one part of one campaign in a
war that long ago turned the poor into a rogue nation, which has now been
mostly decimated. The last twenty-five years have incapacitated our society's
ability to care for those who cannot care for themselves and temporarily
support those who need help in getting back on their feet. There are, for
instance, virtually no programs to assist working age adults with no young
children. After six months of meager unemployment insurance runs out, unless
one is permanently disabled, there are only food stamps to fall back on for
three months every three years. There is no medical coverage, no public
assistance, virtually no substance abuse treatment, no vocational training,
nothing. That part of the war is already over. The current campaign is to mop
up the children and elderly.

While
our minds have been absorbed by the war on terrorism and the war in Iraq, the
President has been waging preemptive assaults on the states, disarming them so
that they will ultimately be incapable of responding even to the minimal needs
of those children and the elderly. The current attacks on Medicaid--one of the
few programs for the poor currently intact--are early bombing runs softening up
the target, but if Medicaid becomes a capped block grant, it will be mortally
wounded.

This
war on the poor is primarily one of attrition. A full frontal assault on women
and children would be unseemly, but taking their defenses out one at a time
does not seem to raise objections back on the home front. So childcare, public
education, school lunches, the Earned Income Tax Credit, even Head Start are
besieged.

The
role of the media in this war has largely been to remain silent. There are no embedded
reporters in the assault on the poor and virtually no analysis. Perhaps it is
because the exciting battles in the war are largely over.

Let
us not fool ourselves. The health of a society can be judged by how it cares
for its poor. A nation that declares war on its poor is deathly ill.

David Hilfiker MD is a Family
Practitioner who spent seven years in a rural Minnesota clinic as a
"country doctor" and ten years at Community of Hope Health Services,
an inner-city clinic in Washington DC. No longer in active medical practice, he
now works toward the creation of a just society through his writing and
speaking. In December 2002, he spent three weeks in Iraq and has since written
and lectured against the invasion of that country. Hilfiker is the author of Healing
the Wounds (Pantheon 1985) and Not All of Us Are Saints (Hill &
Wang 1994) as well as numerous articles, many dealing with the medical care of
the poor. His latest book, Urban Injustice: How Ghettos Happen was published
in September 2002 by Seven Stories Press. This article first appeared in ZNET (www.zmag.org/weluser.htm).